Industrial Marketing

Submitted By:
Syed Hussain Ali
Syed Hamza Qasim
Muhammad Saad Basir
Abdul Hadi Butt
Faizan Arshad
Saima Rana
Mian Muhammad Ahmed

Submitted To:
Miss Syeda Zainab Qaiser

BBA IV
Section K
Lahore School Of Economics

10th October 2018

Mission Statement
METRO is a Cash & Carry Wholesaler for businesses and professionals. METRO provides
quality products and business solutions at the lowest possible prices”

Vision Statement
METRO will dominate the Cash & Carry wholesale segment globally, through our unique
business formula which improves the competitiveness of our customers all over the world.”

Corporate/Industry Background:

History:

Metro was founded by Mülheim an der Ruhr, Germany in 1964. METRO Cash &
Carry’s concept was revolutionary at the time: professional customers could select
their own purchases all under one roof, pay for them in cash and take the items with
them. 50 years on, METRO Cash & Carry is now a leading international player in
wholesale trade with 764 stores in 25 countries across Europe and Asia, serving
about 21 million professional customers with a broad range of products and
customised services. Half a century of METRO Cash & Carry: since the company's
establishment in 1964, we have been a driving force in the self-service wholesale
business. Here, you can trace the milestones of our history and read insightful
interviews with some of the people who have played a major role in our success.

METRO opened its first cash & carry wholesale center in Pakistan in 2007 &
expanded to 5 wholesale centers in a short span of 18 months. In July 2012 METRO
and Makro-Habib combined their wholesale business in Pakistan marking the
beginning of a long-term partnership to the mutual benefit of both companies. The
merger allowed METRO and Makro-Habib to combine resources and gain the
financial strength to lead and grow in a challenging environment and to gain
synergies targeted to generate value for our customers and suppliers alike. Today
the company is operating 9 wholesale centers in Lahore, Karachi, Islamabad &
Faisalabad.
METRO-Habib Cash & Carry Pakistan is part of METRO GROUP’s sales division
METRO Cash & Carry, the international leader in self-service wholesale.
Business Operations:
Metro is primarily a business to business organization. 65% of its customers are
business to business. The store itself acts as a backbone of any grocery business,
whether it is a wholesale or a retail business.It is essential to have a dedicated sales
force to successfully execute this business platform.When it comes to operations,
Metro The company operates more than 750 stores in 25 countries in Europe, Asia
and Africa and has a workforce of over 107,000 employees. Sales in 2016/17 were
approximately 37 billion Euro.
The way Metro operates is through a dedicated sales force, divided into three:

- Trade
a. Wholesalers
b. Small to Medium Sized Retailers (SMR)
c. Kiryana Stores

- HORECA (Hotels Restaurants and Caterers)

- O&I (Office and Industries)
Referring to HORECA, they cater to food related products in offices industry like
Johnny and Jugnu Salt N Pepper, Barbeque Tonight, Xinhua Mall, Ravi Restaurant
which are some of their biggest clients.
The company offers corporate customers a comprehensive product range both in
food and non-food, and efficient business solutions to enhance customer’s
competitiveness in their own markets. In addition to an exhaustive product range, the
retailer also provides a brands segment where small and medium scale industries
can shelf their products for sale using Metro’s distribution channels.
Other than that, the store is primarily concerned with catering to the end consumer.

Brief Analysis of the Industry:

Pakistan’s retail sector at present witnessing a booming and impressive growth.

The local retailers are expanding their boundaries to compete with their larger
foreign competitors. In 2013, seven Pakistani brands were nominated for the first
time for the World Retail Awards held in Paris, in which three brands were
shortlisted. Many local brands have expanded and gone global by adopting fast-
changing trends. With an estimated size of the retail market at around $50 billion, the
country’s retail sector is growing faster than its economy. But still there is long way to
go and some key initiatives by the government and entrepreneurs need to be taken
to meet the future challenges confronting retailing industry in Pakistan.

Competitive Advantage and Core Competencies:

Competitive Advantage:
The competitive advantage on which compete in the market is the low Prices with
high level of Quality at a same place with convenience. METRO provides each and
every thing of household use like food items, electronics, automobile parts and much
more at the same place and the major factor is the low prices and they maintain the
high quality level. And for this purpose they directly deal with the companies for the
supply of their products so that the competitive advantage can be enhanced more.
Core Competencies:
10 good reasons why you should become a customer
● Lowest possible prices
● Stock availability
● One-stop shop
● Extensive business hours
● Quality guarantee
● Free parking
● After sales services
● Promotional activities
● Simple but comprehensive billing system
● Great value for money

Current Marketing Strategies:

Marketing strategy audit is conducted to analyze and identify the significance of the
mission statement and the vision and objective of the METRO cash and carry and
the consistency and interrelation between them. The METRO cash and carry has the
clear mission statement. It has no doubt. They clearly stated that professionals and
retailers are their customers and they try to serve them with high-quality products
along with low prices.
Apart from this the objectives and goals are almost accordingly. They also describe
their objectives along with the principles of METRO which has to follow by every staff
member and these principals give the respect and care to the customer, and this
thing already stated in mission and objectives.

Functional Areas within the Company:

Strategy Formulation:
Segmentation
METRO segmentation of customers is mainly concerned with the two factors,
Retailers, and professionals of every sector and kind.
Segmentation
We design the proper segmentation of the METRO Cash and Carry:

Geographic
Region South Asia
Country Pakistan
State Punjab
City Lahore, Islamabad
Demographic
Income Level Minimum Rs.20000
Economic factor Inflation, reduced Productivity
Psychographic
Social Class Working Class (Retailers and
Professionals)
Buying Habits Convenience
Perception High Quality with low price
Personality Profit Conscious
Behavioral
Benefits Shopping at one place, Customer Care
Usage rate weekly
Occasion Regular
Loyalty status Strong customer relationship
Readiness Stage Desirous
source (www.metro.pk)
Targeting
The targeting strategy of METRO cash & Carry depends upon the segmentation.
METRO carries the differentiated market targeting strategy. They take the whole
customers as a market and carry out the marketing strategy same for the whole. At
this time METRO cash and carry is concerning with the differentiation strategy. They
can also come up with the focus strategy for the retailers so that they think that
METRO cares them and conducting a major portion of business just for the retailers.
It will convince and internally force them to come to METRO just to admire its
services and respect to the retailers.
Is it a focussed strategy?
Yes in the sense that all their customers are users of databases. No in the sense
that they are all different sizes and sectors. Also -Well Data do not sell the software
applications licenses. They can, and do, sometimes sell hardware but this is as a
convenience for their customers.
Macro Economic Analysis

PEST ANALYSIS
Political Environment
These are the factors regarding the Pakistani government which influences the
workings of METRO Cash and Carry. The political instability is the major factor of
low foreign investment in the Pakistan. Same is the case with METRO. The
management always keep in mind the threat of change in government. They
analyzed several times before entering this country and before doing further
expansion in this market.Induction of Lahore branch was conducted by former Prime
Minister Shaukat Aziz and the new government can create certain problems for
METRO. The tax rebates and certain other favours given by the previous
government can be set aside by the change in the government.The ineffective
control of every government regarding the prices of products and inflation creates
certain problems because customers’ demands product at the same and low price
while in such conditions prices changes rapidly. Any political activity regarding labour
and political matters strikes creates hurdles in the way of the METRO’s success.
Economical Environment
Economical changes of Pakistan effects METRO Cash and Carry in such a way that
the interest rates charged by banks can not only restrict the spending power of
customers but also in the fund raising for the company. Interest Rate is about 14.5%
on deposits and 17% on loans.The rapid growth in inflation rate is the major factor
influencing the spending power of buyer. Inflation rate in Pakistan is about 9.3%
yarely while inflation rate of 3rd quarter was 21.5% approximately. Devaluation of
money and increasing exchange rate discouraging the investors to invest in
Pakistan’s market. Policies of state bank can be influenced by the existing political
party and government and every person either business or a separate citizen entity
holder has to follow these rules govern by the State bank.
Switching cost matters a lot in the buying decision behaviour of customer. The
switching cost can be higher in terms of time and the distance competitively the other
specialized wholesale markets.Unfair distribution of wealth is the key factor of
purchasing and also the major characteristic of third world countries. A person’s
spending only shifts from necessaries to luxuries with the increase in money it does
not increase his spending.
Socio-Cultural Environment
First of all society and the culture of Pakistan and its markets is not as much
adapting to change. They do not easily accept the new arrivals in any field of the
product or services. So METRO Cash and Carry for cash kind of product still there is
not a huge market. Although departmental store concept is already good here but it
will take time to understand and develop the kind of shopping culture.The habit of
Pakistanis is to buy goods from the nearest market on the day to day basis and
needs. They do not purchase the whole month grocery and other things. Secondly
they prefer to buy on credit. And to pay in instalments.
Technological Environment
METRO Cash and Carry, a huge departmental store chain more than in 29 countries
is already using the up date and high tech mechanism for the shifting of products
and for other purposes. They have not too much threat of any technological
changes. Customer’s card is already in use along with the entry with that card,
precautionary measures like cameras are installed for safety reasons.They have not
any proper or main manufacturing which requires machines so their use of machines
is just the cranes and forklifts and such that machineries.
SWOT Analysis
Strengths
● METRO has the basic strength of low prices with high quality.
● Serving the customers with the wide variety of products.
● Covering all business solutions under one roof named METRO.
● Having the strong cash and carry business background.
● Best location for such kind of big store and also covering many areas.
● Efficiently using the place and excellent layout.
● Sufficient parking and safety and security measures ensure the quality in
every sector.
● Friendly and co-operative staff.
● Computerized database system which helps both customer and METRO.
● Cafeteria in the building for the refreshment of customers.
Weaknesses
● Less awareness in Pakistan regarding cash and carry business.
● Although location for a big store is suitable but outside the city and not suit for
all customers.
● No proper transportation for customers to carry their products far away.
● Limit of 3 persons on a single membership card
● Restriction of shopping minimum Rs 2000
● Membership or subscription fees for cards.
● Shopping from METRO is much time consuming because the travelling and in
store visiting time.
Opportunities
● Growing market of cash and carry
● Expansion in major cities.
● Online shopping is much better option to save time
● Contracting with major hotels and restaurants.
● Proper METRO owned convenes facilities.
Threats
● Upcoming stores like Wal mart and many others
● Poor law and order situation of Pakistan
● High inflation rate in Pakistan
● Instability of the country

Supplier/Company Relationship:
Metro maintains a strong relationship with its suppliers. They ensure payments are being
made on time as well as credit terms are being offered. Metro is strong and collaborative in
nature with its suppliers and they use Metro as a vehicle to promote their products.
Promotion takes different forms of shapes in product promotion in the form of branding, for
instance in side boards, fixtures and location is being used. This method is known as
category champion concept in which fixture (shelf space) is being locked. Companies like
Tapal and Lipton follow and use this concept.
The suppliers give merchandisers to Metro, who are used to promote their products by
physically being there and marketing them at the point of sale.

Primary and Secondary Suppliers:

According to our findings, we came to know that the main suppliers are the countries top
FMCG companies namely:
- Nestle
- Unilever
- Proctor and Gambel
- RB
- Coke
- Pepsi
- Engro
- Abu Dawood
- Sufi
- Dalda
- K&Ns
- Lays

Supply Chain,Placement:

At the end of the fiscal year, the category buyers negotiate with Metro’s core
suppliers to tell about their future prospects such as new product launches, pricing
strategies and how they aim to promote their products at the desire locations.
Revenue plans are also discussed by them as they forecast how Metro can assist
them in making more sales revenue.
Product:
The existing set of products (services) is focussed around the wholesaler’s market.
And each store is customized to address the needs of professional customers. Metro
offer a wholesale price that leaves the customer room for healthy margins and
provide a one-stop-shop for the customer. In the food range, freshness is Metro’s
first priority. This is guaranteed by the efficient supply-chain and quality control
management Metro have in-place .In non-food, Metro offer only products that are up-
to-date in terms of technology and design, and meet all safety standards.

Place:
Place ensures that the product is available at the right time, right place and in an
effective and efficient manner. For METRO Place decisions are important due to two
aspects. First, they require long term commitments in buildings and facilities, which
means that mistakes can be difficult to correct. Second, these decisions require large
financial investments and can have a large impact on operating costs and revenues.
Poor location can result in high transportation costs, insufficient supplies of raw
materials and labour, loss of competitive advantage and financial loss. METRO is
located at the suburbs of Lahore, at Thokar Niaz Baig on Multan road which is also
the entrance of the Lahore Motorway. The location is important as it covers a lot of
areas such as Sahiwal, Okara, Sheikhupura and all the small localities in between.

Price:
METRO cash & carry follows the pricing strategy of Mark up Pricing along with
Competitor based Pricing. Mark Up pricing strategy in such a way that they charge
3% profit on each item.

Promotion:
Mostly the promotions are being done for the end consumers. Whenever a new store
is made, acquisition drives are being done when potential B2B customers are met
and the customer acquisition drive is being pitched in to them. Their value
proposition includes the total offering that is being offered by Metro and is very
difficult to interpret by competitors.
References:
https://www.metro-cc.com/about/history
https://www.metro-cc.com/history
https://www.metro.pk/about-us
https://www.ukessays.com/essays/marketing/metro-cash-carry-is-a-leading-
international-company-marketing-essay.php
https://www.ukessays.com/essays/marketing/strategic-marketing-plan-of-metro-
cash-and-carry-marketing-essay.php